Element Solutions IncESI
Element Solutions Inc Goodwill & Intangibles Disclosure
GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill
The changes in the carrying amount of goodwill by segment were as follows:
(dollars in millions) | Electronics | Specialties | Total | |||||||||||||||||
| Balance at December 31, 2023 | $ | 1,298.7 | $ | 1,038.0 | (1) | $ | 2,336.7 | |||||||||||||
Held for sale (2) | — | (130.4) | (130.4) | |||||||||||||||||
| Foreign currency translation and other | (40.6) | (33.7) | (74.3) | |||||||||||||||||
| Balance at December 31, 2024 | 1,258.1 | 873.9 | (3) | 2,132.0 | ||||||||||||||||
Divestitures (4) | — | (1.3) | (1.3) | |||||||||||||||||
| Foreign currency translation and other | 57.4 | 53.8 | 111.2 | |||||||||||||||||
| Balance at December 31, 2025 | $ | 1,315.5 | $ | 926.4 | (3) | $ | 2,241.9 | |||||||||||||
(1) Includes accumulated impairment losses of $127 million at December 31, 2023.
(2) As a result of the MGS Transaction, MacDermid Graphics Solutions' assets and liabilities, including goodwill, were classified as held for sale in the Consolidated Balance Sheets as of December 31, 2024. Goodwill held for sale includes accumulated impairment losses of $80.0 million. See Note 5, Divestitures, to the Consolidated Financial Statements for further information regarding the MGS Transaction.
(3) Includes accumulated impairment losses of $46.6 million at December 31, 2025 and December 31, 2024, respectively.
(4) In 2025, the Company completed an immaterial divestiture. See Note 5, Divestitures, to the Consolidated Financial Statements for further information.
Goodwill is tested for impairment at the reporting unit level in the fourth quarter of each year or when events or changes in circumstances indicate that goodwill might be impaired. During the third quarter of 2023, given the lower-than-expected results of the Graphics Solutions reporting unit, the Company determined that it was more likely than not that the fair value of this reporting unit was less than its carrying value. As a result, the Company conducted an interim goodwill impairment test which confirmed that goodwill was impaired, and the Company recorded an $80.0 million impairment charge in the Consolidated Statements of Operations to reduce the carrying value of this reporting unit to its estimated fair value. This impairment charge was primarily driven by the reduction of the expected long-term cash flows for the business due to profit margin pressures from raw material inflation across the packaging supply chain, the loss of a significant newspaper customer, and a higher WACC as compared to the assumptions used for the 2022 annual goodwill impairment test.
After recording the impairment, the carrying value of the Graphics Solutions reporting unit was equal to its estimated fair value and there were no events or changes in circumstances that indicated that goodwill was further impaired through February 28, 2025, the date the business was sold. As of December 31, 2024, the goodwill assigned to the Graphics Solutions reporting unit was reported as an asset held for sale. See Note 5, Divestitures, to the Consolidated Financial Statements for further information.
No impairments of goodwill were recognized for any of the Company's other reporting units during the year ended December 31, 2023 and no impairments of goodwill were recognized during the years ended December 31, 2025 and 2024.
Intangible Assets, Net
The major components of intangible assets, net were as follows:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
(dollars in millions) | Gross Carrying Amount | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||||||||||||||
| Customer relationships | $ | 876.8 | $ | (532.9) | $ | 343.9 | $ | 830.5 | $ | (447.8) | $ | 382.7 | ||||||||||||||||||||||||||
| Developed technology | 313.3 | (272.2) | 41.1 | 291.4 | (233.3) | 58.1 | ||||||||||||||||||||||||||||||||
| Trade names | 163.8 | (46.4) | 117.4 | 92.9 | (37.0) | 55.9 | ||||||||||||||||||||||||||||||||
Reacquired distribution rights | 187.0 | (32.2) | 154.8 | 187.0 | (19.7) | 167.3 | ||||||||||||||||||||||||||||||||
Indefinite-lived trade name | — | — | — | 68.0 | — | 68.0 | ||||||||||||||||||||||||||||||||
| Total | $ | 1,540.9 | $ | (883.7) | $ | 657.2 | $ | 1,469.8 | $ | (737.8) | $ | 732.0 | ||||||||||||||||||||||||||
For 2025, 2024 and 2023, the Company recorded amortization expense on intangible assets of $110 million, $118 million and $124 million, respectively. No impairments of indefinite-lived intangible assets were recognized during the years ended December 31, 2024 and 2023.
In the first quarter of 2025, the Company determined that the useful life of one of its trade names no longer met the criteria of an indefinite-lived asset and concluded no indication of impairment. Subsequently, the Company started amortizing this trade name over 20 years, consistent with other similar finite-lived assets.
Estimated future amortization of intangible assets for each of the next five years is as follows:
(dollars in millions) | Amortization Expense | |||||||
| 2026 | $ | 78.1 | ||||||
| 2027 | 76.5 | |||||||
| 2028 | 76.4 | |||||||
| 2029 | 76.1 | |||||||
| 2030 | 73.7 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Mar 13, 2017 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.